MONTHLY REVIEW. Federal Reserve Agent Federal Reserve Bank of San Francisco. Vol. X V III San Francisco, California, October 20,1934 No.

MONTHLY REVIEW OF B U S I N E S S C O N D I T I O N S Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. X V III San Francisco, California, October 20,1934 No. 10 T W E L F T H F E D E R A L R E SE R V E D IS T R IC T CONDITIO N S Twelfth District business was somewhat less active in September than in August, when a substantial upturn had taken place largely as a result of recovery from effects of labor controversies terminating during July. Excluding the canning industry, industrial employment in the district was maintained near the highest levels of the year during September. Operations at canneries reached a seasonal peak earlier than usual this year because of the early agricultural season, and were reduced by substantially more than is customary in September. Decreases in lumber operations and flour milling followed sharp gains in August. Residential building in the larger cities of the district showed a moderate increase. Contract awards for public works construction tended downward from the relatively high levels of July and August. Freight carloadings decreased by slightly more than the seasonal amount during September as a result of declines in both California and the Pacific Northwest. Department store sales increased and seasonally adjusted indexes for most of the larger cities of the district showed some advance. Sales in agricultural areas also continued substantially above those of last year or 1932. Movement of intercoastal traffic through the Panama Canal expanded further during September. Harvesting activities during September were attended by favorable weather conditions, and previous estimates that the yields of most crops would approach those of other recent years appeared to be substantiated. Volume of marketing has been larger than is customary for this time of year, reflecting in part the early maturity of crops as well as increased demand resulting from short crops elsewhere in the United States. Although averaging higher in September than in August, prices of farm products have tended downward moderately since mid-september. Continued lack of rainfall has intensified the critical shortage of feed and stock water in a large part of the district where livestock raising is important. Commercial loans of reporting member banks remained unchanged from September 19 to October 17 following steady expansion since mid-july. Loans on securities and investments in Government securities were reduced slightly. Total deposits increased further because of a continued expansion in demand deposits. Reserve balances at the Federal Reserve Bank of San Francisco increased substantially during the four weeks ending October 17 to the highest point on record. Reserves in excess of legal requirements also increased. This expansion in Twelfth District banking reserves resulted from Federal Government disbursements in excess of local collections and from an inflow of funds through commercial and financial transactions with other districts. A griculture As in preceding months, climatic conditions during September were favorable for the maturing, harvesting, and drying of crops. Continued deficiency of rainfall, however, resulted in further deterioration of range feed and pastures and delayed the seeding of winter wheat in large parts of the district. As measured by the newly revised United States Department of Agriculture index, prices received by farmers for their products rose from 96 percent of the 1909-1914 average in August to 102 percent in September, at which figure the index was 28 percent higher than a year ago. The chief increases from August to September were in the meat animals and chickens and eggs groups, which were responsible for approximately 22 percent of farm income in the Twelfth District during 1931, 1932, and 1933. Marketing of this district s crops was seasonally active during September and prices received were considerably higher than those received a month earlier or in September 1933. The spring wheat crop in Washington, Oregon, and Idaho turned out to be larger than had been expected, and it is estimated that the district harvest of all wheat totaled 84,555,000 bushels, or only 16 percent below last year s harvest. W heat prices in important Pacific

7 4 MONTHLY REVIEW OF BUSINESS CONDITIONS October 1934 Coast markets were fairly steady during September at a level about 20 percent above that a year ago, but declined somewhat in early October as there was little demand by local millers and practically no export business. As had been forecast earlier in the season, barley production this year turned out to be moderately smaller than in either 1933 or 1932. Exports of barley in September were considerably smaller than the large volume shipped during August and slightly smaller than in September 1933. Notwithstanding a firm tendency on the part of growers to hold their remaining stocks, prices for barley declined slightly during September. It is reported that this resulted in part from substitution of relatively cheap wheat for feed barley. The combined California and Arizona cotton crop was forecast on October 1 to be 334,000 bales, 7 percent larger than output last year and 3 percent larger than average annual production from 1927 through 1931. Picking and ginning progressed rapidly, except for slight local delays from showers. Although cotton prices declined steadily during September and early October, growers are receiving from 25 to 35 percent more for their crop than they did last year at this time. Yield of beans in some parts of California was reduced by insect damage, high temperatures, and brisk winds in early September, but on October 1 the crop was estimated to be 3,331,000 bags, compared with a forecast of 3,268,000 bags on September 1 and an average harvest of 3,412,000 bags during the five years from 1927 to 1931. Confirming trade reports of a larger outturn of hops than was anticipated earlier in the season, the October 1 estimate of the United States Department of Agriculture placed this year s production of hops in California, Oregon, and Washington at 39,745,000 pounds, which is about 3,000,000 pounds more than the September 1 forecast and slightly above last year s production. Carryover of the 1933-1934 crop as of September 1 amounted to 8,658,000 pounds, compared with a carryover of 1,789,000 pounds on September 1, 1933. These heavy stocks of hops and the large new crop have resulted in considerable market weakness during the past few months, although sales have not yet been in sufficient volume to permit the establishment of opening prices. Harvesting of rice in California is progressing satisfactorily. Yields are averaging somewhat higher than in other recent years and milling quality is improved over a year ago. Prices have remained unchanged during the past year. Unusually high temperatures in September injured citrus fruit in several localities in California. Estimated production of the 1934 California Valencia orange crop was reduced 800,000 boxes and on October 1 was placed at 16,365,000 boxes, compared with last year s Valencia crop of 20,058,000 boxes. The new 1934-1935 Navel orange crop in California, which is maturing from two to three weeks earlier than usual, was provisionally estimated on October 1 to be somewhat less than 12,000,000 boxes, which is about the same as the crop in the preceding season. Although average prices received and the volume of oranges marketed declined during September, growers aggregate income this year will probably be higher than in 1933 or 1932. September prices and shipments of the 1933-34 California lemon crop, which latest forecasts indicate will approximate last year s crop, were lower than in August of this year, or September 1933. Cool weather in eastern markets was the chief factor reducing demand for lemons. W ith the exception of apples, practically all California deciduous fruit crops are now harvested. Drying of fruits was completed in most sections by the end of September. Volume of out-of-state shipments of Bartlett pears, regulated by the California Deciduous Tree Fruit Marketing Agreement, was 36 percent larger than in 1933. Average prices were somewhat higher than those received last season. Inasmuch as the volume of pears canned is reported to be at least as large as last year, and since prices paid for pears by canneries were much higher this year than in 1933, a considerable increase in total income of pear growers is indicated. Opening 1934 crop walnut prices were slightly lower than opening prices last year because of heavy stocks and a large new crop. As the quality of this year s crop is exceptionally good the price differential between the best grade and second grade nuts was reduced in order to move the better quality nuts to market more rapidly. Although the early season this year makes direct year-to-year comparisons somewhat unsatisfactory, eastern shipments of grapes dur- Agricultural Marketing Activity (-------September--------,-----------Season to Date------ Carlot Shipments 1934 1933 1934 1933 Deciduous Fruits 18,388 19,795 52,249 41,073 Citrus F ru its... 5,247 5,888 67,397 65,927 Vegetables... 6,722 5,727 64,029 58,162 Exports W heat (bu.)... 106,581 5,399 2,608,397 7,167 Barley ( b u. ) 633,707 661,022 1,669,122 1,584,979 Receipts C a t tle... 152,530* 55,267* 852,374t 553,0691- H ogs... 99,365* 158,720* l,7 2 2,9 3 8 t 1,887,4831- Sheep... 497,157* 501,143* 3,479,725f 3,376,468f Eggs (cases)... 105,999 101,915 1,424,795 1,285,965 Butter (lbs.)... 5,192,216 6,124,748 60,407,855 58,612,938 W heat (carlots). 5,161 4,290 20,671 17,204 Barley (carlots). 624 401 1,513 1,621 Storage Holdings f 1934--------------,-------------------- 1933-------------- N (end of month) September August September August W heat (bu.)... 6,046,000 5,187,000 7,950,000 6,254,000 Beans (bags)... 1,869,000 657,000 754,000 246,000 Butter (lbs.)... 5,120,000 7,155,000 11,032,000 11,492,000 Eggs (cases)... 483,000 620,000 562,000 724,000 * Excludes receipts at Los Angeles, f Excludes receipts at Los Angeles since June 30.

October 1934 FEDERAL RESERVE AGENT AT SAN FRANCISCO 75 ing the current season appear to be moderately larger than for the corresponding period in 1933, but considerably under the large shipments of 1932. Prices received at eastern markets have averaged higher than in either of the two preceding years. The wine grape harvest in California was active during the period under review. Prices paid by wineries are reported to be higher than in 1933 for those varieties of grapes used for sweet wine purposes but lower for varieties used for making dry wines. The condition of the apple crop declined in the Pacific Northwest during September due to increased damage by codling moth worms. In Oregon, W ashington, and Idaho the com mercial apple crop, or that part of the total crop sold for fresh consumption, was estimated at 27,625,000 bushels on October 1, a figure 9 percent larger than output in 1933, but 22 percent lower than annual average production for the five years 1927-1931. Marketing of this crop is reaching a heavy volume earlier than is usual. Recent adjustment of import quotas in the various foreign outlets has improved the marketing outlook abroad. The farm price of apples in mid-september was approximately the same as a year earlier. Pasturage, range forage, hay, and other feed crops are below normal requirements in this district except in Washington, parts of Oregon, northern Idaho, and in a few irrigated sections. The shortage of stock water is acute in parts of southern California and on the desert ranges in Utah. It is anticipated that large numbers of cattle will be marketed during the next two months to prevent heavy winter losses. The condition of cattle in Twelfth District states ranges from poor to fair and, according to the condition estimates of October 1, was somewhat lower on that date than a year ago and considerably below the ten-year average for this season. Cattle prices at Chicago and at principal Pacific Coast markets fluctuated considerably during September and the first half of October with a slight net loss for the period, The Federal Government has been buying old ewes in drought areas of the district allowing growers to hold a few more of their ewe lambs. Sheep have been moved to winter ranges unusually early, although feed and water prospects are poor. Lamb prices strengthened during September but declined subsequently and by mid-october were approximately 10 percent lower than in October 1933. In d u stry Industrial output declined somewhat in the Twelfth District during September. A large part of the decrease took place in those industries which had been particularly active in August as a result of the ending of the marine workers' strike in July. Total industrial employment in California declined 12 percent from August to September and was 8 percent lower than in September 1933. Both these decreases resulted from the fact that canning activity reached a seasonal peak in September 1933, whereas the peak came in August this year because of the early maturing of fruits. Excluding reports from the seasonally erratic canning industry, neither employment nor payrolls changed materially from the preceding month after allowance for the customary seasonal changes. This bank s seasonally adjusted index of employment which excludes canning, remained at the highest point reached this year, 83 percent of the 1923-1925 average. Average weekly earnings were 4 percent lower in September than in August, this decrease approximately offsetting an increase in the preceding month. Contract awards for public works in the Twelfth District totaled 11 million dollars during September. Although awards during September were smaller in value than in either August or July, the total of $67,000,000 for the entire third quarter represented a substantial increase over both the first and second quarters of this year, and was about 70 percent greater than the value of contracts let in the third quarter of 1933. Decreases during both August and September resulted from smaller awards for Federal Government projects, the immediate program for which has now largely been completed. Non-Federal works partly or wholly financed by the Federal Government continued to increase. Privately financed new construction showed little change, an increase Employment t---------- Californ;ta---------- N r Oregon- N o. of No. of No. f Employees > No. / Employees ^ of Sept. Sept. of Sept. Sept. Industries Firms 1934 1933 Firms 1934 1933 All Industries* 191,346 112 20,475 23,274 Stone, Clay, and (-8.2 ) ( -1 2.0 ) Glass Products. 53 5,749 5,198 3 193 120 Lumber and W ood ( + 1 0.6 ) ( + 60.8) Manufactures.. 113 14,411 14,571 42 9,798 12,049 ( 1.1) ( 18.7) 13 1,132 1,368 7 1,179 1,334 Clothing, Millinery, ( 17.3) ( 11.6) and Laundering. 142 10,722 10,926 6$ 143 150 Food, Beverages, ( 1.9) ( 4.7) and Tobacco.. 295 57,746 80,044 28 4,543 4, 8 1 7 ( 27.9) ( 5.7) Public Utilities.. 49 45,526 44,218 ( + 3.0) Other Industries!. 472 71,982 65,951 ( + 9.1 ) Miscellaneous... 44 13,893 13,288 26 4,619 4, 8 0 4 ( + 4.6 ) ( 3.9) W holesale and 214 31,144 30,376 ( + 2.5 ) *Public utilities, wholesale and retail figures not included in this total. t Includes the following industries: Metals, machinery, and conveyances; leather and rubber goo d s; oils and paints; printing and paper goods. JLaundering only. Figures in parentheses indicate percentage change from September 1933.

7 6 MONTHLY REVIEW OF BUSINESS CONDITIONS October 1934 in residential building about offsetting a decrease in non-residential building. Activity at lumber mills declined by more than the seasonal amount during September in contrast with an unusually sharp expansion in the preceding month. After seasonal adjustment, operations in the Douglas Fir producing area remained larger than in most other recent months, but seasonally adjusted output in the W estern Pine region, which has tended downward steadily since May of this year, was lower than at any time since mid-1933. Lumber shipments and the volume of new orders were smaller in September than in August. Shipments continued to exceed production, however, with a consequent decrease in inventories. Daily average output of crude oil in California decreased considerably between August and September to 468,000 barrels, the smallest average for any month since February. Despite this decline, the excess of production over allotments increased because of a sharp reduction in proration allowables. Refinery activity also decreased during September. Production of crude oil expanded slightly during the first three weeks of October. Grape crushing was seasonally active during September throughout California, although preliminary estimates of wine production indicate the likelihood of a considerably smaller vintage than in 1933. California production totaled approximately 56,453,300 gallons last year, of which 36,268,600 gallons were dry wines and 20,184,700 gallons sweet wines. Production this season is now estimated at 38,000,000 gallons, of which 25,000,000 gallons will be of sweet varieties. The relatively high volume of sweet wine production anticipated for the current season reflects the failure of dry wine sales to meet expectations during the Industry Indexes of daily average production, adjusted for seasonal variation (1923-1925 daily average=100) -------1934------ \ 1933 -------. Aug. July June Sept. Aug. July General Carloadings- -Industrial. 52ÏÏ Manufactures Lumber... 52 Refined Mineral Oilsf Flour... 103 H Slaughter of Livestock. Cement... W ool Consum ptiont... Minerals Petroleum ( California)! 71 Lead (United States)$. Silver (United States) $ Building and Construction# Total... 51 Building Permits Value Larger Cities... 10 Smaller Cities... 17 Engineering Contracts Award ed V alue Total... I ll Excluding Buildings 209 49 47 42 49 48 55 152 149 147 141 146 141 52 37 40 54 57 61 128 131 130 134 137 136 116 95 89 72 74 124 110 116 115 113 53 58 61 57 46 54 60 80 84 93 103 95 75 78 78 74 76 74 53 56 57 36 36 40 45 39 28 34 64 64 39 26 33 28 10 10 9 14 14 14 15 16 15 13 13 13 140 69 77 46 61 50 286 234 151 78 113 83 fnot adjusted for seasonal variation. ^Prepared by Federal Reserve Board. #Indexes are for three months ending with the month indicated, Preliminary. past year. This situation may be explained in part by consumer preference for the higher alcoholic content wines and by the continuance of home manufacture of light wines. Representative price quotations at which sales of wine have been made are not readily obtainable, but reports from the trade indicate that a decided price recession has taken place since the first of the year. Current weakness is due in part to sales by some producers to make cooperage available for the new vintage. Trade Department stores in the district as a whole reported moderately more than the usual increase in value of sales during September, the seasonally adjusted index advancing from R E T A IL T R A D E Twelfth District Percentage changes in value of sales and stocks t--------------1934 compared with 1933-------------- \,--------- N E T S A L E S ----------N STOCKS Jan.1 to end of September September Department Stores.... 5.5 ( 73) 7.8 - Los Angeles... 1.5 ( 6) 3.0 Other So. California.. 3.2 ( 9) 7.4 Oakland... 9.0 ( 5) 3.7 San Francisco... 5.2 ( 8) 6.6 Bay R e g io n... 6.7 ( 18) 6.4 Central California... 8.9 ( 5) 12.8 Portland!... 10.1 ( 8) 10.4 8.6 ( 4) 11.9 Spokane... 24.0 ( 5) 28.5 Salt Lake C it y... 17.1 ( 4) 14.5 Apparel Stores... 3.6 ( 33) 11.3 Furniture Stores... 3.6 ( 34) 9.9 All Stores... 5.1 (140) 8.4 End of September 4.2 ( 54) 5.6 ( 6) 14.2 ( 6) 0.7 ( 5) 4.3 ( 7) 3.3 ( 16) 11.6 ( 5) 4.2 ( 7) 4.9 ( 4) 16.1 ( 5) 0.2 ( 3) 1.3 ( 19) 7.7 ( 26) 4.4 ( 99) f Includes five apparel stores which are not included in district department store total. Figures in parentheses indicate number of stores reporting. 76 percent of the 1923-1925 average in August to 78 in September. Sales of reporting California stores, which constitute the bulk of district sales, increased slightly, and there was a considerable rise throughout the Pacific Northwest and in Salt Lake City. Total value of sales was 6 percent larger in September of this year than in the corresponding month last Distribution and Trade,---------------- 1934---------------- \, 1933------------x Sept. Aug. July June Sept. Aug. July Indexes adjusted for seasonal variation Carloadings$ (1923-1925 average=100) Total... 671T 69 72 67 63 61 62 Merchandise... 7811 83 92 90 74 69 68 Intercoastal Trade Total... 80 74 48 64 81 76 63 W estbound... 81 66 75 67 93 92 100 Eastbound... 78 78 41 62 76 73 55 Retail Trade Automobile Salesî Total... 69 71 68 74 59 55 57 Passenger.... 63 65 62 69 56 52 53 Commercial.. 115 129 127 120 87 86 98 Department Store Salesî*... 78 76 73 74 72 73 81 Stocks... 63 62 63 65 66 61 57 Collections# (--------------------- Actual Figures --------------------- Regular... 45.6 45.6 44.6 47.1 42.0 41.6 41.9 Installment. 17.6 19.3 17.2 17.3 16.2 17.0 16.0 IDaily average. At end of month. #Percent of collections during month to amount outstanding at first of month. JfPreliminary. ^Revised series.

October 1934 FEDERAL RESERVE AGENT AT SAN FRANCISCO 7 7 year. The Fairchild index of prices at department stores, at 88 on October 1 (January 1931 =3 100), was the same as on September 1, and was 2 percent above the index a year ago. Seasonally adjusted sales of new automobiles decreased somewhat during September, offsetting an increase in the preceding month. New passenger car sales declined by more than the usual substantial amount, and sales of commercial vehicles also decreased, although they usually expand in September. Total sales were 15 percent larger than in September 1933. W H O L E S A L E T R A D E Twelfth District Percentage changes in value of sales Cumulative September 1934 1934 t compared with \ compared Aug. 1934 Sept. 1933 with 1933 Agricultural Implements... 4.6 30.2 69.3 Automobile Supplies... 2.8 7.0 11.1 Drugs... 0.1 12.1 24.5 Dry G o o d s... 11.1 3.2 14.2 Electrical Supplies... 3.6 14.7 39.6 Furniture... 0.3 15.7 3.3 Groceries... 4.4 13.6 15.2 Hardware... 4.4 12.7 28.6 S h oes... 22.2 10.2 16.7 Paper and Stationery... 2.5 2.2 20.4 All Lines... 4.0 8.6 21.5 Value of wholesale trade declined moderately during September, in contrast with a sharp expansion in the previous month. Sales were 9 percent larger than in September 1933. Railway freight carloadings decreased by somewhat more than the seasonal amount during September. Merchandise and miscellaneous traffic declined, although a slight increase is Bank Debits* September September First nine months Arizona 1934 1933 1934 1933t Phoenix... $ 21,594 $ 15,505 $ 222,099 $ 154,365 California Bakersfield 9,407 6,315 75,960 59,669 Berkeley... 14,644 11,567 169,058 103,596 Fresno... Long Beach 19,630 21,983 15,021 20,835 150,422 203,174 109,732 200,070 Los Angeles... 488,616 495,552 4,791,016 4,483,074 Oakland... 176,800 149,827 1,450,932 1,419,923 Pasadena... 15,189 17,312 161,683 161,177 Sacramento 71,196 24,256 528,950 240,802 San Bernardino. 5,594 4,233 50,281 40,684 San Diego... 27,441 27,775 263,317 256,534 San Francisco... 650,247 620,828 6,091,407 5,466,076 San Jose... 19,273 16,362 146,479 120,176 Santa Barbara.. 8,180 7,116 71,983 62,774 S tock ton... 14,609 12,040 123,673 95,793 Idaho Boise... 12,760 10,109 103,051 77,306 Nevada Reno... 7,918 5,621 66,188 42,834 Oregon Eugene... 4,532 3,455 35,500 26,290 Portland... 134,444 108,363 1,098,038 882,772 Utah Ogden... 15,992 11,710 111,119 80,826 Salt Lake City.. 47,127 41,535 417,199 347,621 W ashington Bellingham.... 5,048 4,923 41,466 35,999 Everett... 5,299 5,693 46,112 41,611 S ea ttle... 140,344 135,187 1,2'19,226 1,059,394 Spokane... 33,480 24,236 265,372 183,839 Tacoma... 22,856 21,020 198,596 162,224 Walla W a lla... 4,178 3,769 36,893 27,002 Y a k im a... 13,300 8,474 89,543 56,962 Total...$2,011,681 $1,828,639 $18,228,737 $15,999,125 *In thousands of dollars. fmarch 1933 figures were incomplete for some cities during the banking holiday period. customary between August and September. Industrial loadings, however, did not recede as much as usual. Shipments originating in both California and the Pacific Northwest were lower than a month earlier, after allowance for seasonal factors. Water-borne intercoastal traffic expanded slightly further during September, following a sharp upturn last month which had practically restored volumes to pre-strike levels. Since there is ordinarily a decrease during the month, the seasonally adjusted index of intercoastal shipments increased from 74 (1923-1925 average = 100) in August to 80 in September. The increase came entirely in westbound traffic through the Panama Canal, which had decreased in the preceding month, Pacific to Atlantic Coast freight having changed little. Prices Changes in prices of agricultural commodities, which are now being marketed actively, accounted for most of the rise and the subsequent decline in wholesale price indexes for the United States during September and the first half of October. Farm products prices, as measured by the Bureau of Labor Statistics index, were 23 percent higher and food prices 16 percent higher than a year earlier. The index of other commodities is now about 1 percent higher than early in October 1933. Am ong prices of commodities not discussed elsewhere in this Review canned fruit prices increased moderately between mid-september and mid-october, apricots showing the largest advance. Quotations for dried apricots and raisins advanced slightly while moderate declines were reported for other dried fruits. Although the code price for domestic blue eagle copper remains at 9 cents per pound, copper for export continues to be sold at a substantial discount from this price. New York quotations for the latter on October 20 were 6.65 cents per pound, compared with 6.85 cents per pound a month earlier. Zinc and lead prices declined slightly and at present are considerably lower than a year earlier. The spot price of foreign silver at New York rose to 55^ cents per ounce on October 16, the highest quotation since April 1929. The producers of newly mined domestic silver continue to receive 64^2 cents per ounce. The Credit Situation Between September 19 and October 17, com mercial loans of Twelfth District city member banks showed no change, whereas they had increased steadily from mid-july to mid- September. Investments in securities other than obligations of the United States Government also remained unchanged during the

7 8 MONTHLY REVIEW OF BUSINESS CONDITIONS October 1934 latest four-week period. Minor reductions in loans on securities and in holdings of United States Government securities were reflected in a slight contraction in total loans and investments of reporting banks from the three-year peak reached on September 19. Demand deposits increased moderately during this fourweek period, while there was a slight reduction in time deposits. Reserve deposits of Twelfth District member banks increased 24 million dollars to the highest level on record during the four weeks ending October 17. This increase, most of which came in the last of the four weeks, was the largest change in the volume of reserve deposits of Twelfth District banks since last May. It reflected not only a continuance of local disbursements by the United States Treasury in excess of collections in this area, but also a movement of funds from other parts of the United States into the Twelfth District during the first half of October. From the time of the banking holiday in March 1933 through April 1934, Federal Government disbursements in the Twelfth District exceeded local collections by $183,000,000. This gain of funds was offset only in part by an outflow of funds to other districts, and member bank reserve deposits increased steadily. By May 1934 these reserves had reached the record level of $230,000,000 of which about $80,000,000 represented reserves in excess of legal requirements. During the period from May 1934 to the end of September, reserve deposits of member banks fluctuated irregularly around the $230,000,000 level. In this period, net United States Treasury disbursements contributed approximately $115,000,000 and purchases of gold by the San Francisco Mint and the Seattle Assay Office about $40,000,000 to district banking reserves. Slightly over $20,000,000 of these funds was used bv banks to secure currency from the Reserve Bank to meet public requirements, leaving about $135,000,000 for use in other ways. This entire amount was transferred to other areas, partfy by the banks themselves in payment for securities purchased in eastern markets, and partly by or for customers of banks, largely in settlement of indebtedness incurred in the purchase of securities, commodities, et cetera, outside the Twelfth District. Some indication of the amount transferred by banks for their own accounts is to be found in the increase in investments of city institutions, which were $77,000,000 higher on October 17 than on May 16, holdings of United States Government securities having increased $26,- 000,000 while other investments were increased $51,000,000. A large part of these additional securities was bought outside the Twelfth District. These figures do not indicate what additions may have been made to investments of country banks, although it is probable that the amount such banks purchased outside the Twelfth District was small. 1929 1930 1931 1933 1933 1934 M E M B E R B A N K R E SE R V E S Twelfth District (Monthly averages of daily amounts. October figures preliminary.) The fact that most of the gain in banking reserves coming into the district because of United States Government operations was offset by payments of funds to other areas because of commercial and financial transactions and by a moderate increase in demand for currency within the Twelfth District, explains why member bank reserve deposits showed no net change during the period from mid-may to the end of September. Although total reserve deposits showed no change during this period, the proportion of those reserves representing an excess over legal requirements declined because deposits at banks were expanding steadily during this period and thus raising the amount of required reserves. The decline in excess reserves came entirely at city banks, country banks having increased their deposits at the Federal Reserve Bank of San Francisco sufficiently since May to provide for additions to their reserve requirements. Not only did country member banks increase their reserve deposits during this period, but they also built up their deposits with city banks, thus providing indirectly part of the funds with which city banks purchased investments. The sharp expansion in member bank reserve deposits during the first half of October was sufficient to offset most of the decrease that had taken place in excess reserves of Twelfth District member banks between the middle of May and the end of September.

October 1934 FEDERAL RESERVE AGENT AT SAN FRANCISCO 7 9 SUMMARY OF NATIONAL CONDITIONS Prepared by the Federal Reserve Board Volume of industrial production remained unchanged in September when there is usually a seasonal increase and factory employment and payrolls declined. An important factor in the decrease was the strike in the textile industry. Retail trade in rural districts showed a large increase, and sales at department stores in cities also increased, though somewhat less than seasonally. Deposits at banks and com mercial loans continued to increase. Production and Employment. Volume of industrial production, as measured by the Board s seasonally adjusted index, declined from 73 percent of the 1923-1925 average in August to 71 percent in September. There were substantial declines in activity at cotton and woolen mills, reflecting the influence of the textile strike, and in the output of shoes, automobiles, and lumber. After the termination of the strike textile production increased. Steel mill operations, which had declined sharply during the summer, have been at a higher level in recent weeks than in the early part of September. Production of beef and lamb increased further in September, reflecting in part the disposal of animals bought in the drought areas by the Federal Government. W heat flour production and sugar meltings also were larger in September. Output of anthracite and bituminous coal showed a larger than seasonal increase. Factory employment and payrolls declined considerably in September, largely as a result of the textile strike. The number of workers employed was substantially reduced in the automobile, iron and steel, and shoe industries, as well as in the basic textile industries. There was a larger than seasonal increase in employment in clothing industries, while in the non-ferrous metals, building materials, food products, and paper and printing industries employment was sustained. Am ong non-manufacturing lines, employment increased seasonally from August to September at coal mines and in retail trade. There was a substantial increase in number of persons provided with work by the Emergency W ork Program of the Federal Relief Administration, while employment on public works decreased somewhat. The value of construction contracts awarded, as reported by the F. W. Dodge Corporation, continued in about the same volume during September as in other recent months. Department of agriculture crop reports for October 1 indicated a cotton crop of 9,443,000 bales as compared with a yield of 13,047,000 bales last year. The corn crop, which averaged 2,516,000,000 bushels from 1927 to 1931, is estimated at 1,417,000,000 bushels this year. Hay and pasture conditions improved in September and weather in the first half of October was generally favorable for forage crops. The SO U R C E S A N D U SES O F B A N K IN G R ESERVES Twelfth District Changes in millions of dollars during the weeks indicated FED ER AL RESERVE BANK OF SAN FR ANCISCO (in millions of dollars) t-------------------- Condition--------------------- ^ SOURCES OF FU N DS Oct. 17 Oct. 10 Sept. 19 Oct. 18 1934 1934 1934 1933 W eek Reserve Total Bills and Securities... 167 167 167 166 Ending Bank Commercial Treasury Total Bills Discounted... 4 1934 Credit Operations Operations Supply Bills Bought... i i i August 8.... + 1.1 5.0 + 9.3 + 5.4 United States Securities... 166 166 166 162 August 15... -f- -1 +- 4.0 + 5.0 + 9.1 Total Reserves... 338 323 317 265 August 22... 1.9 2.5 + 13.4 + 9.0 Total Deposits... 277 259 255 181 August 29.... +.3 8.9 + 3.7 4.9 Federal Reserve Notes in September 5.... + 1.4 + 11.0 16.0 3.6 Circulation... 214 214 212 216 September 12.....2 1.2 + 11.7 + 10.3 Federal Reserve Bank Notes in September 1 9.... -r.6 7.6 + 1.7 5.3 Circulation... 8 September 26.....3 9.9 + 10.4 + *2 Ratio of Total Reserves to De October 3..., 1.8 + 9.8 + 3.3 + 11.3 posit and Federal Reserve October 10.... +.5 8.1 + 8.9 + 1.3 Note Liabilities Com bined... 68.9 68.4 67.7 66.7 October 17..., + 4.0 + 11.7 2.3 + 13.4 USES OF FU N DS W eek Demand Member Bank Other Ending for Reserve F.R.B. Total 1934 Currency Deposits Accounts Demand August 8... + 3.5 + 2.0.1 + 5.4 August 15... + 1.0 + 9.3 1.2 + 9.1 August 22... + 1.0 4-4.8 + 3.2 + 9.0 August 29... +. 7 5.2.4 4.9 September 5-4- 7.9 3.5 3.0 3.6 September 12.5 + 9.6 + 1.2 +10.3 September 19 3.6 1.9 + -2 5.3 September 26 2.3 + 3.2.7 +.2 October 3.. + 5.7 + 5.8.2 + 11.3 October 10.. ~f-.7 * +.6 + 1.3 October 17...4 f 14.5 -.7 + 13.4 * Change less than $50,000. REPORTING M EM BER BANKS Twelfth District (in millions of dollars) Loans and Investments Total. Loans T o ta l... On Securities... All Other... Investments Total... United States Securities.. Other Securities... Reserve with Reserve Bank... Net Demand D eposits... Time D ep osits... Due from Banks... Due to Banks... Borrowings at Reserve Bank.. -Condition- Oct. 17 Oct. 10 Sept. 19 Oct. 18 1934 1934 1934 1933,880 1,874 1,889 1,673 900 900 904 893 214 213 216 220 686 687 688 673 980 974 985 780 598 593 603 459 382 381 382 321 161 153 144 96 721 703 699 579 935 937 943 862 186 186 174 134 206 196 198 135

8 0 MONTHLY REVIEW OF BUSINESS CONDITIONS October 1934 yield of white potatoes is estimated at 362,- 000,000 bushels, about equal to the average for 1927-1931. Distribution. Daily average railroad freight carloadings increased from August to September by about the usual seasonal amount, but declined slightly in the first half of October. Sales at department stores increased from August to September by somewhat less than within recent weeks prices of textile products and scrap steel declined slightly and gasoline prices showed a considerable decrease. The open market price of silver advanced sharply in the first half of October. Bank Credit. Excess reserves of member banks have shown no material change during the past month and on October 17 amounted to about $1,750,000,000. A reduction in Treasury IN D U S T R IA L P R O D U C T IO N Index numbers of industrial production, adjusted for seasonal variation (1923-1925 average»»100). the estimated seasonal amount, while retail sales of general merchandise in rural districts, as shown by reports of mail order houses and chain stores to the Department of Commerce, increased considerably. Commodity Prices. Wholesale prices of farm products and foods, which had advanced P E R C E N T I 25f W H O L E S A L E PR ICES Indexes of the United States Bureau of Labor Statistics. By months 1929 to 1931; by weeks 1932 to date. (1926=100). cash and deposits with the Federal reserve banks somewhat more than offset a seasonal increase of $57,000,000 in the volume of money in circulation and a continued expansion in required reserves arising from a growth in deposits. Volume of reserve bank credit outstanding showed little change. B IL L IO N S O F D O L L A R S PA R x. EM F L O Y M E N T iy R O L L S V / v ' 'v * ' 1929 1930 1931 1932 1933 1934 F A C T O R Y E M P L O Y M E N T A N D P A Y R O L L S Indexes of factory employment and payrolls, without adjustment for seasonal variation (1923-1925 average=100). sharply in August and the first week of September, subsequently declined somewhat. The weekly index of wholesale prices of the Bureau of Labor Statistics, which had advanced from 74 percent of the 1926 average at the beginning of June to 78 percent early in September, stood at 76 percent in the second week of October. Recent declines occurred principally in those products which had increased most rapidly in preceding weeks, such as wheat, cotton, livestock, and meats. Prices of commodities other than farm products and foods have in general shown little change since last January, but M EM BER BANK CREDIT Wednesday figures for reporting member banks in 90 leading cities. Latest figures are for October 17. At reporting member banks in leading cities there was a further growth in deposits and in loans and investments. Between September 19 and October 17 total deposits of the banks increased by about $500,000,000. Commercial loans to customers and member banks holdings of United States Government securities increased further, while security loans declined. Short-term money rates continued at low levels during September and the first three weeks of October. Yields on Government securities declined in October, following an increase in August and September.